Leveraged Loan Market Sees Surge in Activity

Strategic Insights -

The leveraged loan market has seen a significant surge in activity this week, with a number of major deals launching, including a $500 million exit loan for SemGroup, which filed for bankruptcy protection in 2008 after losing billions in energy-related trades. Bank of America has also launched a $355 million credit facility for Allen Systems Group, while JPMorgan, Barclays, and RBC Capital are in the market with a $600 million term loan B for Skype. The total volume of the leveraged loan pipeline has exceeded $1.4 billion, with the Standard & Poor's/Loan Syndications and Trading Association Leveraged Loan 100 index rising 42.58% this year.

Key Takeaways:

  • Bank of America, along with BNP Paribas, launched a $500 million exit loan for SemGroup, which filed for bankruptcy protection in 2008 after losing billions in energy-related trades.
  • The deal comes on the heels of several other deals that launched this week, including a $355 million credit facility for Allen Systems Group.
  • JPMorgan, Barclays, and RBC Capital are in the market with a $600 million term loan B for Skype.
  • The total volume of the leveraged loan pipeline has exceeded $1.4 billion.
  • The Standard & Poor's/Loan Syndications and Trading Association Leveraged Loan 100 index has risen 42.58% this year and 7.13% since the last quarter.
  • The average bid price on the index closed at 83.72, a 35.09% change for the year.
  • An S&P analyst noted that the market is beginning to see new issuance and has been absorbing the impact of recent defaults.

Statistics:

  • $500 million: size of the exit loan for SemGroup
  • $355 million: size of the credit facility for Allen Systems Group
  • $600 million: size of the term loan B for Skype
  • $1.4 billion: total volume of the leveraged loan pipeline
  • 42.58%: year-to-date return of the Standard & Poor's/Loan Syndications and Trading Association Leveraged Loan 100 index
  • 7.13%: quarterly return of the Standard & Poor's/Loan Syndications and Trading Association Leveraged Loan 100 index
  • 83.72: average bid price on the Leveraged Loan 100 index
  • 35.09%: year-to-date change in the average bid price on the Leveraged Loan 100 index

Sources:

  • LFN, Sept. 10, 2009
  • The Standard & Poor's/Loan Syndications and Trading Association Leveraged Loan 100 index